An Irvine mortgage loan processor has tapped into an increasingly common source to help clients cut costs: India.
Equinox Corp., which launched three years ago, has 500 workers in India, with eight people at its Irvine headquarters.
The company, which provides loan processing, customer service and lead generating services, was bought late last year by Indian outsourcing firm i-Flex Solutions Ltd.
Equinox can handle 32 different mortgage operations for clients who want to outsource, said Chief Executive Don Ganguly.
I-Flex has customers in banking and other financial services markets. Its annual revenue is about $260 million.
Equinox has boosted its India facilities from 25,000 square feet to 40,000 square feet since its founding. That’s enough room for 750 employees. Ganguly said he hopes to add another 60,000 square feet or so by early next year to handle more growth.
“We’re at the tip of the iceberg,” he said.
Ganguly said the ties to i-Flex have made it easier for Equinox to attract banking clients, which typically don’t give their business to startups.
“They’re really used to dealing with larger organizations,” he said.
Equinox first targeted mortgage banking because processing home loans is labor intensive, and the industry hasn’t been as quick to embrace technology, he said. Using workers in India cuts costs because they are skilled employees, but work for much less than those in the U.S.
“The lower level of automation lends itself to outsourcing,” Ganguly said.
For its part, technology outsourcer i-Flex got a fast-growing company that helped build up one of its weaker units: business process outsourcing, including lead generation and customer service.
Although nearly all of Equinox’s business is in the mortgage industry, it’s looking to diversify into other financial services, including investment and retail banking.
Equinox and i-Flex could be part of an emerging trend among outsourcing firms that target specific industries or sectors,unlike companies like Bermuda-based Accenture Ltd. and India-based Wipro Ltd., which provide outsourcing for just about any industry.
One industry observer said the strategy of focusing on a single sector is growing in popularity with outsourcing companies.
“I think the uptick in all of this is coming in the future,” said Jagdish Dalal, a Hartford, Conn.-based consultant who helps outsourcing companies with strategy.
Equinox is aware of the political sensitivities of outsourcing. The issue is the subject of much debate and anxiety among U.S. workers who are concerned their jobs could be easily shipped overseas.
But Ganguly said outsourcing is an important way for customers to cut costs and improve their finances. Profits from outsourcing low-level jobs can be plowed back into the company to hire skilled U.S.-based workers, such as sales staff.
“What you’re trying to do is attack areas of high costs,” he said. “There are a lot of areas that money can go toward.”
The mortgage industry is one of OC’s biggest employers. Leading national subprime lenders such as Orange-based Ameriquest Mortgage Co. and Irvine-based New Century Financial Corp. are based here.
The big lenders typically run their own processing and customer service operations. Increased outsourcing could be a way for them to cut costs as interest rates rise and the real estate market tightens.
“Almost all economists agree that outsourcing on balance is a good thing that leads to lower costs,” said Doug Duncan, chief economist with the Mortgage Bankers Association in Washington, D.C. “What we have seen is that reducing costs has opened up the access of home ownership, particularly in the subprime area.”
Duncan said the mortgage industry has crafted a set of common home loan processing standards during the past five years.
“The fact that standards are making their way into the industry is enabling outsourcing firms to come in,” Duncan said.
At the same time, rising interest rates are making it more expensive for mortgage bankers to lend money to homebuyers.
“It makes you look at the operating costs,” Ganguly said.
